Denver Real Estate Is Thriving: 5 Reasons Why Denver’s Real Estate Market Is So Competitive
Denver is currently in the middle of a seller’s market, which means that the number of buyers is outnumbering the inventory of homes for sale in the area. As a result, home sellers have a significant advantage in negotiating power, while buyers will be competing with one another for offers. What is strange about this seller’s market is that it’s occurring during a pandemic when the economy is not in the best shape (and that’s an understatement considering the country’s unemployment figures). With that in mind, the question you likely have is why is Denver real estate booming right now?
Signs That The Denver Housing Market Is As Competitive As It’s Ever Been
Before going into why Denver’s real estate market seems to be in great shape, it helps to understand what exactly indicates that Denver’s housing market is currently competitive. The following are a few of the critical factors contributing to the current seller’s market in Denver:
Active Listings Are Down Significantly From Last Year
By the end of August 2020, there were only 5,496 active listings in the Denver area. At the same time the previous year, there was 41.22 percent more active listings. Additionally, the number of new listings went down by 11 percent from July to August. These numbers indicate fewer and fewer homes are being put up for sale, contributing to the seller’s market (a low inventory). When property inventory is low, it means that there is less competition among sellers.
Record Number Of Homes Are Being Sold
Although the number of homes sold dropped drastically in April (which was during the initial stages of the outbreak when nobody knew anything about the virus), sales picked up significantly in the following months. Although sales dipped 18.73 percent from July to August, there were still 5,959 homes sold in the Denver area, a record for that month. Because active listings are down, this indicates that demand is robust.
Median List Prices Are Increasing Year-By-Year
Even though the number of homes sold has increased as the year has gone on (and despite the record numbers in August), the total number of home sales in 2020 is still lower than last year. Considering what we know so far, this is likely due to home sales dropping dramatically during the initial outbreak – no surprise there. However, median list prices are up by 6 percent from last year. Such numbers can only lead us to conclude that the combination of increased demand and low inventory have resulted in a seller’s market.
Denver Real Estate Appreciation Is One Of The Highest In The Country
Finally, real estate in Denver has appreciated at a steady rate over the years. The median closing price for detached homes in Denver has increased from $450,000 in September of 2019 to $510,000 in September of 2020. Over the past 20 years, Denver real estate has appreciated by 134.93 percent (an average of 4.25 percent every year), which is the highest rate in the state and the country.
5 Reasons Why Denver Real Estate Is Booming Even During A Pandemic
The previous factors indicate that the Denver real estate market is indeed in great shape. But the odds are you’re still wondering how it’s in such great shape, especially when considering the state of the economy — and the state of the world at large. The following are some of the primary reasons why there are so many homebuyers in Denver — and why it continues to be a seller’s market:
1. Low-Interest Rates
Mortgage rates are currently at historically low rates all over the country. At the end of October 2020, the average mortgage rate for a 30-year fixed-rate loan was only 2.8 percent. The average of a 15-year fixed-rate interest rate dropped to 2.33 percent around this same time. The reason why rates are so low is simple: the Federal Reserve is desperately trying to encourage people to take out home mortgages despite the recession caused by the pandemic to increase prices, sales, and construction across the country. Many residents who were renting in Denver and whose employment was not affected are taking advantage of the low-interest rates while they can.
2. Significant Population Growth
Denver’s population has grown more than any other county in Colorado. Over the past decade, Denver’s population has increased by 21 percent, which amounts to an increase of 127,000 people. If you look at the historical rate of growth of the Denver Metro area, this shouldn’t come as a surprise. Its population growth rate has outpaced the national rate for almost a century. What does this mean? It means that as more people move to Denver, the demand for housing will only continue to grow. People who may have left the state are also coming back in droves since they can live wherever they want now that many businesses allow their employees to work remotely.
3. Growing Job Market
Before the pandemic, the job market in Denver was growing significantly. The tech sector, in particular, has been attracting a lot of new residents. The unemployment rate throughout 2019 was also below 3 percent, according to the U.S. Bureau of Labor Statistics. While you might assume that the massive unemployment rates throughout the country during the pandemic would affect the real estate market, this hasn’t been the case in Denver. Denver’s unemployment rate continues to be one of the lowest in the country at this time. Denver has ranked sixth in cities in the U.S. for jobs retained during the pandemic.
4. Living In Denver Is Appealing
Before the pandemic, Denver was one of the best places to live in the U.S. In fact, U.S. News named Denver second in its list of 150 best places to live in the U.S. According to a recent report by SmartAsset, Denver also ranks second in the list of most popular cities in the U.S. where millennials are moving. When you consider the fact that Denver has managed to rank high for jobs retained during the pandemic, one can only assume that Denver will continue to attract new residents once things get back to normal. Countless reasons outside of the job market make Denver such an attractive place to live. The city’s cultural aspects to the natural attractions (Denver is surrounded by natural beauty and is a dream for outdoor enthusiasts).
5. Denver Residents Want Stability
One of the primary reasons why housing inventory is low is that homeowners are less likely to want to move in the middle of a pandemic. They embrace the stability of being a homeowner and do not want any more change introduced into their lives. This thought process may change once the pandemic ends, but for now, it’s easy to see why many homeowners don’t want to sell at this time. On the other hand, people who are renting and whose employment hasn’t been affected by COVID-19 may see this as an excellent time to buy. Why? Because they want to get stability where they can get it. With interest rates as low as they are, people are looking for stability in homeownership.
Now Is The Time To Buy A Home In Denver
At first thought, you might be wondering why you would buy real estate in Denver if we’re currently in a seller’s market. Wouldn’t this put you at a disadvantage? Especially when you consider all of the competition and the fact that median prices have risen over the year? The thing is, interest rates are still incredibly low, which is why you should make the leap now. Once the pandemic comes to an end, inventory may go up; however, it’s doubtful demand will slow down. The job market will likely grow much more robust, and more people will continue moving to Denver, which will drive home prices up. If you wait, you may get stuck having to pay higher home prices while missing out on the currently low-interest rates.